Reverse mortgages have gotten a lot of press in media and commercials lately. Mostly geared toward seniors who need some cash but wish to stay in their homes; these loans are said to be a good idea. Of course there are drawbacks to them and not everyone thinks they are as good as they have been promoted.

Reverse mortgages also known as home equity conversion mortgages turn the equity you have in your home and convert it into cash in several ways. Lines of credit, monthly payments, one time payouts or any combination of these are the basic ways used. The amount the homeowner can use is determined by their age, home value, current interest rates and loan fees.

Even though we have only more recently began hearing about them, reverse mortgages have actually been around since the 1960’s. Since 2005 they have become more popular among homeowners, although people are still slow to use them. The latest statistics on these loans are around 76,351 active; an increase of 77% from the previous year.

The top reverse mortgage cities are in California; as well as, New York City, Phoenix, Boston, Denver and Coral Gables Fla.

There are drawbacks to these mortgages though for example, the cost upfront is quite high. Interest rates are taken out of the closing costs which tend to be higher in the long run. Borrowers are also still responsible for taxes on the property, insurances and maintenance. Also, mortgage insurance will be added to that list. This insurance ensures the lender will get their money back no matter what. After all house prices might fall and the house might not be worth as much as it once was or the mortgage might go over too long a term making the interest worth more than the home itself.

Younger borrowers won’t be able to take out as much as older homeowners will, since they can only take out what equity is in the home already. So in order to qualify for a reverse mortgage you must be at least 62.